Buyers Guide to Purchasing a Home

The Ins and Outs of Purchasing Home Owners Insurance

What is home owners insurance? And how do you choose the right policy for your needs? Lets break it down.


Introduction
Homeowners insurance is a type of insurance that protects your home and property from certain risks. It also covers your liability for injuries to others on your property, as well as their property. Homeowners insurance can be purchased from a variety of companies or through an association or group plan offered by your employer or other organization. You can buy additional coverage for specific items such as jewelry, firearms, or valuable artwork.
 
Why you need homeowners’ insurance
Homeowners Insurance protects you financially in case of certain types of loss. The most common reasons to purchase homeowners’ insurance are:
 
  • The cost of repairing or rebuilding your home if it is damaged by fire or other perils (such as windstorms, earthquakes, and flooding)
  • Your legal responsibility to cover injuries to others that occur on your property due to negligence or failure to maintain safe conditions
  • Your legal responsibility for damage you cause on the property of others (for example, a tree limb falls from your tree onto their house and damages it)
Homeowners Insurance also covers any liability for damage that may occur because of owning certain types of personal property such as lawnmowers and cars that can have an impact on neighbors' properties.
 
How is homeowner insurance determined?
Homeowner insurance is a policy that protects your home, its contents, and its people. It covers the structure of your home if it's damaged or destroyed. It also protects personal belongings inside the house, such as furniture and clothing. Homeowners insurance may also include protection for additional living expenses in case you have to live elsewhere while repairs are made on your home after an accident or disaster occurs.
 
How much coverage do you need?
The amount of coverage you buy depends on several factors:
  • The value of your home
  • How much it would cost to rebuild or repair the property (also called replacement cost)
  • What type of deductible applies (a deductible is an amount that must be paid before insurance kicks in)?
  • Whether there are any special features included with your policy
Applying for homeowners’ insurance
When you apply for a homeowners insurance policy, the provider will look at your home and assess its value.
 
The more expensive your home is, the more expensive your premiums will be. The provider may also ask about any restrictions on your property such as pets or children that could affect the cost of your premium. If you have a pool or trampoline in the backyard, this could also increase the cost of insurance premiums too.
 
When buying homeowners' insurance from an independent broker rather than directly from an insurance company (which many consumers do), it's important to get quotes from multiple providers before deciding about which company offers you the best deal for coverage on both liability and property protection costs.
 
What is not covered by homeowner insurance?
You may be wondering, “If I have homeowners’ insurance, what isn’t covered?” Homeowners insurance does not cover all losses. There are many things that are excluded from coverage. It is important to read the policy carefully before deciding on a company or buying the insurance. The following are some of the most common exclusions:
 
  • Losses caused by war, nuclear accident, terrorism, and riots
  • Damage from earthquakes, floods, and hurricanes
  • Damage caused by freezing pipes in winter without adequate heat source (a wood stove would typically be considered an adequate heat source)
  • Damage caused by floods that result from broken pipelines owned or maintained by others than you (for example, if your basement is flooded because someone breaks a water main)
Different levels of coverage
While most insurance plans offer the same basic types of coverage, there are several different levels of coverage. Higher levels of protection usually cost more money and may not be necessary for your needs, so it’s important to understand the various types of insurance and what they do before you decide on which one to purchase.
In general, homeowners’ insurance is divided into two categories: property insurance and liability coverage (also known as personal injury protection). Property insurance covers any damage or loss incurred by fire, windstorm, or other natural disaster; theft; vandalism; glass breakage; collapse of an embankment on your property; etc., while liability coverage protects you if someone is injured while visiting your home as a guest or trespassing through it illegally.
 
Deciding what level of coverage is best for you
When you're working with your insurance agent, it's important to understand that there are four basic levels of homeowners insurance coverage. The first is HO1, which provides property damage coverage only and is often referred to as "replacement cost" or "actual cash value" (ACV). If your home were damaged by a fire, this plan would pay for the cost of rebuilding it as closes to original condition as possible but not more than what it would cost today.
 
The next level up is HO2—also known as "extended replacement cost." This policy adds living expenses coverage for up to two years after the loss occurred. If you need temporary housing while repairs are being made, this policy will provide up to $10,000 toward those expenses per claim. In addition, if your home suffers from water damage due to flooding or burst pipes (for example), extended replacement cost will cover repairs more than your ACV limit. This includes mold remediation if necessary; however, note that some policies won’t include mold removal unless they specifically state otherwise in their fine print or online description pages when comparing quotes online.
 
Negotiate and look at multiple providers
Negotiate with your insurance agent. It is possible to negotiate a better rate on your homeowner’s insurance from the agent who provides you with coverage, so don't be afraid to ask for a discount. Remember that an insurance company has two costs: commissions and expenses. The more money they make in commissions, the less money they can pass onto you in savings.
 
Negotiate with multiple providers. Because there are many factors that go into determining how much homeowner’s insurance costs—including where you live and what kind of home you own—it's important to shop around when shopping for a policy. You may be able to find cheaper rates at other companies if they cover conditions differently than your current policy does or if they provide different levels of coverage at different prices.
 
Review all coverage options under each plan before deciding based on price alone; it's worth paying more upfront if achieving peace of mind later down the road will save time and money overall!
 
Conclusion
Remember that the best way to find a price you can afford is to look at multiple providers and get quotes. You should also contact your state's insurance commission to see if there are any programs available for lower-income families or those who have had trouble getting coverage in the past. Don't be afraid to negotiate with your agent, as well
 

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